Chinese Solar Panel Maker Falters as Prices Plunge – NYTimes.com

HONG KONG — Suntech Power, a Chinese manufacturer that became the world’s largest producer of solar panels by 2011 only to be battered by plummeting prices, announced on Wednesday evening that its main operating subsidiary had been pushed into bankruptcy by eight Chinese banks.

Suntech was the Icarus of the solar panel industry, with production that soared year after year on heavy investment, as Western investors bought up its New York-traded shares and its international debt issues. Part of a massive Chinese government effort to dominate renewable energy industries, Suntech grew to 10,000 employees in its hometown of Wuxi on China’s east coast and even set up a small factory in Arizona to do further assembly of panels there.

But a tenfold expansion of overall Chinese solar panel manufacturing capacity from 2008 to 2012 pushed down prices of solar panels about 75 percent, undermining the economics of the business. Rapid expansion of natural gas production in the United States and a curtailment of subsidies in the European Union also hurt solar panel prices, as did an American imposition last year of import tariffs totaling about 40 percent after an anti-dumping and anti-subsidy investigation.

The European Union is also completing its own trade investigation of Chinese solar panel shipments that could lead to steep tariffs there as well.

Ocean Yuan, the president of Grape Solar, an importer of solar panels that is based in Eugene, Oregon, said he foresaw a series of bankruptcies by big Chinese solar panel manufacturers, some of which have very high debt like Suntech. Chinese manufacturers lost as much as $1 for every $3 of sales last year as they struggled to keep factories open despite plummeting prices.

“They are bleeding every day: the more they sell, the more they lose money,” Mr. Yuan wrote in an e-mail.

He predicted that European and U.S. solar panel manufacturers would also face crippling financial pressures and that the long-term survivors in the industry would be manufacturers in Taiwan, who have low costs and are not subject to the American import tariffs or the likely European tariffs.

The Chinese banks quietly asked a court on Monday in Wuxi to declare the operating subsidiary, Wuxi Suntech, insolvent and begin restructuring it. The operating subsidiary notified the court on Wednesday that it did not object to the insolvency petition.

Suntech Power, the parent, said that it was not filing for bankruptcy and would continue to honor warranties on the company’s solar panels.